Small business squabbles over paid sick time laws

NEW YORK — Two months after a severe flu season forced millions of workers to stay home, paid sick time is becoming an issue for many small-business owners.

City councils in Portland, Ore., and Philadelphia earlier this month approved laws requiring employers to give their workers paid sick leave. And two Democratic lawmakers introduced a bill in Congress that would make paid sick leave a federal requirement.

There's a great divide among business owners over the issue. On one side are opponents who say paid sick time creates financial and administrative burdens for businesses that are struggling with a still-recovering economy and uncertainty about health care costs and federal budget cuts. Others argue that it makes for a happier workplace and encourages employees to stay home instead of coming to work and infecting everyone around them.

"It increases morale, it increases loyalty, it provides a much safer work environment," says Andy Shallal, owner of Busboys and Poets, a chain of four restaurants in the Washington, D.C., area. He was already giving his workers paid sick time before the Washington City Council passed a sick leave law in 2008. It's particularly important in the restaurant business that sick employees don't come to work.

A lot of Americans get paid sick leave, including many who work at small businesses. A study issued in July by the Bureau of Labor Statistics found that 66 percent of small businesses, those with up to 499 workers, provided paid sick leave. Among companies with fewer than 50 workers, half provided leave. Eighty-two percent of workers at companies with 500 or more employees have paid sick leave.

No law in New Jersey

New Jersey does not require employers to offer paid sick leave, according to The Center for Women and Work at Rutgers, which estimates that 1.2 million private-sector workers in the state don't have paid sick time.

Karen White, director of the Working Families program at the center, said that paid sick time is "both a workers' rights issue and a public health issue." About three-quarters of food service workers in New Jersey have no paid sick days, she said.

"Obviously, we'd prefer for them to stay home if they're sick, but that's a difficult decision if it means missing a rent check or mortgage payment" because they're not paid for their missed days.

New Jersey employers groups, however, have said that requiring paid sick time is a burden on small businesses.

Lawmakers have been stepping in to get paid sick leave extended to more workers. San Francisco is widely believed to be the first major city to enact a paid sick leave law. The law, which requires that sick time be given to all workers, took effect in 2007. Since then, Washington, Seattle and Connecticut have enacted laws and Portland's City Council passed its bill on March 13. The laws aren't identical, but all generally provide for workers to accrue sick time and to also use it for family illnesses and some types of emergencies.

Opinions differ

Paid sick leave has run into roadblocks in other cities. Philadelphia's City Council passed its bill March 14, but Mayor Michael Nutter vetoed a similar bill in 2011. He hasn't decided yet whether he'll sign the latest bill, spokesman Mark McDonald says. In Milwaukee, voters in 2008 approved a referendum creating a paid sick leave ordinance, but it was nullified by a subsequent state law that banned local governments from enacting such laws. And in New York City, a sick leave law has stalled in its City Council.

Opponents of mandatory paid sick leave say that it will hurt small businesses. Some also argue that the government shouldn't intrude in the relationship between companies and their workers.

"Any time you have a government mandate on small businesses, that take away their options, their flexibility," says Andy Markowski, director of the National Federation of Independent Business in Connecticut, where a mandatory sick leave law took effect early last year. "With paid sick leave, a business might not be able to afford a benefit package that has benefits that are generous."

It's too soon to tell what impact the Connecticut law is having on businesses, Markowski says. But he also notes that the sick leave law is one of many sources of uncertainty for companies in the state — they've also had to contend with state tax increases and they're still waiting to see how the health care law will affect them.

Among the consequences cited by opponents of paid sick time: Companies will have to pay overtime to replacement workers, financially strapping businesses that are already struggling in an uncertain economy. The added expense will prevent them from expanding, or hiring other workers. Keeping track of accrued sick time will force an owner or another employee to take time away from other critical tasks.

Those issues are likely to be raised in Congress, where Rep. Rosa DeLauro, D-Conn., and Sen. Tom Harkin, D-Iowa, have reintroduced the Healthy Families Act, which would require that workers be allowed to earn up to seven days of paid sick time a year. DeLauro has introduced such a bill in every Congress since 2004. In the last Congress, the bill didn't make it to the House floor.

DeLauro expects opposition from small businesses, but she notes that companies with fewer than 15 employees will be exempt.